July 29: Nepal Credit and Commerce Bank (NCC) is preparing to acquire any financial institution in a bid to meet minimum paid-up capital as directed by NRB. Earlier NCC was in process of becoming the first bank to meet paid-up capital requirement through the biggest merger till date. However, the process could not succeed due to decline of the biggest partner Kumari Bank at the last moment. “Thus, the bank is preparing to meet the minimum paid-up capital through acquiring any other financial institutions in the given time,” said Bandana Pathak, Spokesperson and Deputy General Manager of the bank.

NCC is also doing homework on meeting paid-up capital through internal process (bonus share and right share). “We will try to our extent to meet the paid-up capital through internal process. Otherwise, we will acquire any other financial institution in order to meet the paid-up capital in time,” she added. NRB through the monetary policy of the FY 2072/73 had directed BFIs to raise their paid-up capital to Rs 8 billion by the end of FY 2073/74.  For that matter, NRB has encouraged BFIs to adopt merger process. Under the mechanism, NCC Bank, Infrastructure Bank, Apex Development Bank, International Development Bank, Supreme Development Bank and Kumari Bank had agreed to merge with each other on January 13.

NRB had approved the biggest merger process till date to be finalised at the end of FY 2072/73. However, Kumari Bank at the last moment forfeited the merger process due to its shareholders’ rejection on the merger process through special general meeting (SGM). The merger process delayed due to the back-off of the bank with the highest paid-up capital in the group. According to the directors of the bank, Kumari Bank forfeited the merger as the shareholders of the bank didn’t accept the swap ratio decided for the merger.

Few promoter shareholders of Kumari Bank lobbied against the merger during SGM citing Kumari Bank is better and stronger bank than NCC in terms of paid-up capital, transactions and performance. As per the due diligence audit (DDA) of assets and liabilities of the banks, 100 units of shares of NCC was decided against the same number of shares of Kumari Bank. However, Kumari Bank’s shareholders who opposed the merger argue that as the bank is stronger than NCC, the swap ratio should be decided accordingly. The final result of the SGM went in the favour of opposition shareholders and the bank at the end forfeited the merger process.  

Currently, NCC Bank along with five other financial institutions is in the final stage of the merger process. After the merger, the paid-up capital of the merged entity will totalled Rs 5.52 billion.